tisdag 26 september 2017

The pub with no beer

I spend a lot of time in bars and pubs. However that is not the focal point of this blog. I took the title of this blog from an old Australian ditty which bemoans the lack of beer in a pub in the great outback and the sad consequences for the dreary traveller upon arriving at its doorstep.

Following on from my two previous blogs on retail failures I continue in the same maudlin vein by reviewing the position of BHS (British Home Stores), a year on from its entry into administration.
The history of this failure is discussed widely on the internet and I urge you to read the background to its demise. What seemed to be the natural demise of a failing brand was accentuated in the press by the dreadful way in which its last owner but one: Sir Phillip Green, sold it on to an individual of dubious merit. The failure to adequately protect the pension rights of its workers also drew the ire of the business press and academic community. We will not revisit that aspect of the case in this blog: but focus on the essential issue of the relevance of a brand that has failed so badly and the logic of trying to resurrect it from the dead. Let’s investigate its demise more fully.

Prior to going into administration in April 2016 it is a fact that it had been performing badly for the past seven years: this was not a sudden death to borrow a cliché. At the time it went into administration it had incurred debts of nearly £1.5 billion.
Founded in 1928 it carved out a position over the decades as a vibrant department store focusing on homeware, lighting and clothing. It built up a solid reputation for offering affordable items, at a competitive price and at an acceptable level of quality.
This worked well up until the 1990’s. Since then it has succumbed to the prevailing long-term trends and developments in retailing – such as the internet revolution and the resulting surge to online retail channels and the increasingly more effective and efficient management of retail supply chains.
Operators such as Primark and Next encroached increasingly into the BHS space by offering similar items at lower prices. Even supermarket groups such as Asda moved into the pace by offering a range of clothing and accessories. Quite simply BHS became almost an irrelevance. For a more detailed appraisal of its death I encourage you to read an article published in the magazine called The Drum.

Foto: Independent

How did BHS respond? Well like many companies it panicked and tried a number of initiatives, most of which appeared to have little rationale or forethought behind them. For instance it introduced a food range in some (but not all of its stores) and entered into a collaboration with a retailer called Claire’s Accessories in an attempt to attract a more youthful, teenage footfall through its stores.
Inevitably none of these introductions had any meaningful impact. At the title of the article in The Drum suggests, it became a brand with no purpose or to use my analogy, a pub with no beer. After all what is the purpose of a brand if it occupies no meaningful position in the minds of its target markets? It is the equivalent of throwing money on top of a burning fire.
One would expect therefore to see it slip off into the deep blue yonder. Not a bit of it!!

The Al Mara Group, a Qatari conglomerate, prior to the demise of BHS had acquired the international and online divisions of the business operations. In September 2016 it reappeared on the scene as BHS.com.
As the name suggests its reincarnation revolved exclusively around its website and online operations in the UK. Initially it focused on a much smaller range and depth of items addressing the homeware, bedding and lighting sections only. This was based on the rationale that these categories, particularly lighting, had been the strongest feature of its previous value proposition. A couple of months after its re-launch it subsequently introduced a range of fashionwear items for males and females. It employs eighty-four people (a lot less than the original eleven thousand individuals in its previous existence.

After about six months into the venture its Managing Director Kevan Mallender expressed satisfaction with its performance, claiming sales of over £3 million and arguing that as it was effectively start-up business these figures represented success. Let’s try to assess how well (or how badly) it has performed since September 2016.

At this stage in the blog I am going to introduce a challenge to you. Before reading any more of the content, I would like you to visit the website page: www.bhs.com and carry out an assessment of the site addressing all of the typical criteria that we use. Suggested areas include: layout of the site and ease of navigation, content, engagement, updates, quality of information on the items, payment procedures, customer service and so on. After this please come back and read on!!

When we reflect on a brand and its relevance and value the gurus suggest that successful brands must be built around a relevant and live value proposition that registers in the mind of the target markets. Clearly BHS failed on most of the measures and prerequisites to meet such standards.

Foto: Most Photos

The new website has been assessed by experts and the general view is that as a value proposition via its online offerings, BHS remains a reasonably competitive position. It offers shoppers free delivery on items purchased over the value of £50. If it is under this figure the shopper pays £3.50 for delivery. That leaves it in a similar position to retailers such as Marks and Spencer. However it does not offer a “click and collect” option and does not make use of third party services such as Doodle and Collect+.

There is little content on the website apart from basic information on critical issues such as price and size options. Crucially it make no use of video content to capture the attention of the visitor to the site. This it can be argued would encourage interaction. It has no user-generated content such as postings of experiences or customer reviews. It has no live chat feature. It’s sign-up and register feature dominates the page and surprisingly it provides no incentive for shoppers to actually sign up. The search bar also has limitations (try it out)
In essence I would argue that the website at best resembles one that would have been common about five to eight years ago: information-led, no interactive dimensions and little attempt to sign up members.

I come back to my original point. What is the purpose of this brand? By that I mean the revised online version. Why is it revisiting the fashion space when it has been hammered by many more flexible and agile operators?

Possibly if it uses data from its previous customers it might be able to generate some degree of re-energised loyalty. However I doubt it. Shoppers have moved on: it is very difficult to lure them back unless you offer them something new and exciting. I do not see this on its current website.
In early 2017 the BHD Managing Director placed his faith in using the concept of a referral channel to build visitors to the site and subsequent sales. In this respect it entered into a collaboration with referral provider Mention Me. This concept is based on the simple idea of rewarding existing customers who encourage friends, relations and colleagues to sign up.
While this has certain merits, it is difficult to believe that it will become a “game-changer”.
In summary I am very pessimistic and cynical about this “new” venture. What do you think?